A Legal Analysis of Community Development Agreements as a Tool for Enhancing Social Licence to Operate for Mining Companies in Nigeria

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ABSTRACT

A Legal Analysis of Community Development Agreements as a Tool for Enhancing Social Licence to Operate for Mining Companies in Nigeria

Professor Peter Akper, SAN*

The Nigerian Mineral and Mining Act, 2007 has introduced the mandatory conclusion of Community Development Agreements (CDAs) between mining companies and their host communities as a condition precedent to commencement of mining operations. The objective is to ensure that the social and economic benefits of a mining project are transferred to the host community. Although, the requirement of CDAs is a novel provision under Nigeria’s mining regime, it reflects age long industry practice where mining companies voluntarily seek and obtain ‘social licence to operate’ from their host communities. Whether the CDAs contemplated under the law can achieve their objective is perhaps moot, but given the relative successes achieved in other jurisdictions, there is reasonable basis for optimism.

This paper therefore examines the use of CDAs as a viable tool for obtaining ‘social licence to operate’ in Nigeria by carrying out an in-depth analysis of provisions of the NMMA 2007, its accompanying Regulation and Guidelines, and the essential features of CDAs executed under the Act with a view to demonstrating its utility, while drawing from the experiences of other mining jurisdictions. The paper concludes that proper negotiation of CDAs and good faith implementation are key success factors in the use of CDAs to enhance social licence to operate in Nigeria.

INTRODUCTION
The Nigerian Minerals and Mining Act, 2007 (NMMA 2007)₁ makes it mandatory for operators of Small Scale Mining leases, Mining Leases and Quarry Leases to enter into Community Development Agreements (CDAs)₂ with their host communities in order to promote healthy relationships. Although, the efficacy of CDAs as mechanisms for promoting social licence to operate mining ventures is yet to be empirically tested in Nigeria given its relative novelty, researches and industry experience across many mining jurisdictions strongly suggests that CDAs can aid the process of obtaining SLO.₃ Nigeria therefore stands to benefit from its use to promote acceptance as well as engender mutually beneficial relations between Mining Companies (MC) and their host Communities (HC). It is argued that mining companies operating in Nigeria can leverage on the mechanism of CDAs, provided in the Mining regime, as is the case with other mining jurisdictions to enhance their social licence necessary to optimise mining operations.

This paper examines the utility of obtaining social licence to operate and how the process can be enhanced by the use of CDAs prescribed by the NMMA 2007. It discusses how CDAs have been used to ensure the transfer of the benefits of mining operations to host communities in Nigeria and the policy implications of making CDAs a regulatory requirement and proffers some recommendations with view to improving the practice in Nigeria.

* Ph.D., B.L. Research Professor of Law, Nigerian Institute of Advanced Legal Studies. I acknowledge the assistance of Mr. T. Iber who helped with background research and collection of materials; and the Ministry of Mines and Steel Development for access to relevant information and data

1. See Act No. 20 of 2007
2. Section 116 NMMA 2007
3. See for instance, The World Bank, Mining Community Development Agreements Source Book (March 2012); Jennifer Loutit et al, ‘Emerging Practices in Community Agreements’ Columbia Center on Sustainable Investment, February 2016

THE GRAVITAS REVIEW OF BUSINESS & PROPERTY LAW VOL.8 NO.1